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The gains from external scale economies and comparative advantage

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  • Kwok Tong Soo

    ()
    (Lancaster University)

Abstract

This note develops a model of inter-personal trade which combines comparative advantage and external scale economies. It is shown that the gains from external scale economies outweigh those from comparative advantage as the population size increases.

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Bibliographic Info

Article provided by AccessEcon in its journal Economics Bulletin.

Volume (Year): 34 (2014)
Issue (Month): 1 ()
Pages: 84-88

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Handle: RePEc:ebl:ecbull:eb-13-00742

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Keywords: External scale economies; comparative advantage; gains from trade;

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  1. Caballero, R.J. & Lyons, R.K., 1989. "Internal Versus External Economies In European Industry," Discussion Papers, Columbia University, Department of Economics 1989_10, Columbia University, Department of Economics.
  2. Courant, P.N. & Deardorff, A.V., 1989. "International Trade With Lumpy Countries," Papers, Michigan - Center for Research on Economic & Social Theory 90-04, Michigan - Center for Research on Economic & Social Theory.
  3. Nordas, Hildegunn Kyvik, 2000. "Comparative Advantage and Economies of Scale: When Does Ricardo Dominate Smith?," Review of International Economics, Wiley Blackwell, Wiley Blackwell, vol. 8(4), pages 667-80, November.
  4. Ruffin, Roy J, 1988. "The Missing Link: The Ricardian Approach to the Factor Endowments Theory of Trade," American Economic Review, American Economic Association, American Economic Association, vol. 78(4), pages 759-72, September.
  5. Ethier, Wilfred J, 1982. "Decreasing Costs in International Trade and Frank Graham's Argument for Protection," Econometrica, Econometric Society, Econometric Society, vol. 50(5), pages 1243-68, September.
  6. Ronald W. Jones, 2000. "Globalization and the Theory of Input Trade," MIT Press Books, The MIT Press, The MIT Press, edition 1, volume 1, number 026210086x, December.
  7. Ruffin, Roy J., 2009. "The gains from specialization and population size," Economics Letters, Elsevier, Elsevier, vol. 105(1), pages 76-77, October.
  8. Young, Allyn A., 1928. "Increasing Returns and Economic Progress," History of Economic Thought Articles, McMaster University Archive for the History of Economic Thought, McMaster University Archive for the History of Economic Thought, vol. 38, pages 527-542.
  9. David Hummels & Peter J. Klenow, 2005. "The Variety and Quality of a Nation's Exports," American Economic Review, American Economic Association, American Economic Association, vol. 95(3), pages 704-723, June.
  10. Kremer, Michael, 1993. "Population Growth and Technological Change: One Million B.C. to 1990," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 108(3), pages 681-716, August.
  11. Choi, E. Kwan & Harrigan, James, 2003. "Handbook of International Trade," Staff General Research Papers, Iowa State University, Department of Economics 11375, Iowa State University, Department of Economics.
  12. James R. Melvin, 1969. "Increasing Returns to Scale as a Determinant of Trade," Canadian Journal of Economics, Canadian Economics Association, Canadian Economics Association, vol. 2(3), pages 389-402, August.
  13. Gene M. Grossman & Esteban Rossi-Hansberg, 2008. "External Economies and International Trade Redux," NBER Working Papers 14425, National Bureau of Economic Research, Inc.
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